Long-term Visitors Boost Profits for Swank Hotels

crainsnewyork.comBy Lisa Fickenscher21/4/2014

The Pierre hotel is fielding some unusual requests lately. Before confirming a reservation, one guest asked if she could move her baby grand piano and expensive artwork into a two-bedroom suite. Another customer, unhappy with the small-screen TV in his suite, asked management to install a 90-inch model.

These guests aren't staying for just a night or two. They are among a new wave of extended-stay clients at the swanky Fifth Avenue property who are booking lavish accommodations for months at a time. Of the property's 189 rooms, 49 are suites.

The Pierre is the latest luxury hotel to aggressively woo the growing number of wealthy customers who need temporary pieds-à-terre in the Big Apple for a handful of reasons. They could be renovating their apartment, relocating here, getting medical treatments at one of the city's top hospitals or simply enjoying a long holiday.

Only an elite group of properties—including the Pierre, the Carlyle, the Waldorf Astoria, the Sherry Netherland, the St. Regis and the New York Palace—has suites large enough to appeal to such guests and provide the pampered services they expect. These grandes dames have been accommodating extended-stay visits for years. Some, like the Pierre and the Carlyle, even have permanent residents. But the number of people seeking these arrangements is rising, say real estate brokers who represent hotels, which are increasingly competing for the business.

These guests are especially attractive because they book large suites that are ordinarily empty at least half the time but command steep rates, from $20,000 to $100,000 or more a month. The units typically have an occupancy rate of 40% to 50%, so booking them for months at a time can significantly boost those numbers, as well as a property's bottom line, according to PKF Consulting, which focuses on hotels.

Marketing efforts

In January, the Pierre stepped up its sales and marketing efforts to attract these clients, promoting extended-stay packages on its website and even sending executives to the Middle East to sell royal families on its posh digs. It is also wooing wealthy locals, visiting doormen at the best residential buildings along Park Avenue and offering them gift certificates to dine at the hotel's Sirio Ristorante—because they are often the first to know when someone is starting a renovation.

In addition, the Pierre solicits insurance adjusters—who foot the bills for policyholders' temporary residences because of damage to their properties from, say, a fire or flood—and hospital staffs.

"This is backyard outreach, letting people know we are interested, available and would welcome their referrals," said Kathleen Shea, vice president of sales and marketing for Taj Hotels Resorts and Palaces, which operates the Pierre.

The Pierre had previously hosted such guests on an ad hoc basis, but its new push has generated more business—so much so that Ms. Shea expects these efforts to yield double-digit revenue increases.

"Before we formalized this program, we received a couple of requests from clients each month," said Sunny Kim, a sales executive who handles extended-stay accounts. "Now I'm getting calls every day."

The Pierre's success is not being celebrated uptown at the Carlyle hotel, which lost its sales and marketing director, Maureen Stella, to the Pierre about 18 months ago.

"I'm not very happy about the Pierre's strategy," said Carlyle Managing Director Giovanni Beretta. About 18% of revenue at the Carlyle, on Madison Avenue and East 76th Street, comes from selling its 64 suites for long-term stays.

But, Mr. Beretta pointed out, the Carlyle's suites have kitchens, compared with only half of the Pierre's. To compensate, the Pierre extends a 15% discount at its restaurant to long-term guests and offers them a microwave and refrigerator.

Besides, Ms. Kim noted, "Most of our clients don't cook. They'd rather order room service or dine at local restaurants."

The New York Palace recently signed veteran real estate executive Margaret Bay of Brown Harris Stevens—who had leased private residences for the Waldorf Towers for the past 22 years—to represent it exclusively and help it grab more of the business. The Madison Avenue property's suites run from $20,000 for a one-bedroom to $250,000 for a three-bedroom triplex per month.

"Demand [for these accommodations] has increased, especially from abroad and among people coming here for medical reasons," said Ms. Bay.

Several prominent New York hospitals have established footholds overseas to promote their services here. New York-Presbyterian, for example, recently partnered with a medical group in Saudi Arabia, while Mount Sinai has an office that helps patients obtain U.S. visas.

Indeed, the vast majority of the Pierre's long-term guests are getting treatments at nearby hospitals, including Lenox Hill for prostate care, New York-Presbyterian for neurosurgery and Memorial Sloan-Kettering for cancer.

Visitors seeking medical treatments are also big business for the Waldorf Astoria, which has 180 units (80% of which are suites) in the Towers portion of the property, from the 26th floor to the 42nd. These clients especially want privacy.

"Guests up there don't even like us to whisper about the Towers," said James Blauvelt, executive director of catering at the Waldorf Astoria. "The Towers has a private entrance, private elevators and staff who are dedicated to the Towers' guests."